Wyeth v. Levine's Unintended Consequences: Prescription Data-Mining Banned in Vermont

(MoneyWatch)  A federal court in Vermont has upheld a law preventing drug companies from "data-mining" prescription information from pharmacies. The court cited the U.S. Supreme Court's Wyeth v. Levine anti-preemption ruling as one of its reasons in doing so, suggesting that the Wyeth decision will consequences far beyond personal injury class-actions.

The Vermont case had nothing to do with patients harmed by drugs. Rather, it focused on the information that drug companies gather for marketing purposes. Companies buy prescription data from pharmacies in order to figure out doctors' prescribing patterns, and to persuade them to write scrips for one drug over another.

Vermont passed a law banning the practice, and PhRMA, IMS Health, Verispan, Source Healthcare Analytics and Wolters Kluwer Health sued the state seeking to overturn the ban.

The decision (which you can download here) is a major victory for medical records privacy, and for those who want to see healthcare costs controlled.

While it has long been known that companies sift prescription patterns looking for leverage that their sales reps can use to persuade doctors to write their companies' branded drugs over generics and competitors, it is less well-known that the data drug companies buy from pharmacies includes (according to the ruling):

... the prescriber's name and address, the name, dosage and quantity of the drug, the date and place the prescription is filled and the patient's age and gender ...

Maine and New Hampshire made similar laws banning data-mining.

One of the reasons the states wanted data-mining banned was because it saves money. The court found that even a 1 percent change in doctor prescribing habits away from branded drugs:

... would lead to a $2 million cost savings to Vermont.

Government reimbursers prefer to see docs writing generics over branded drugs because generics are so much cheaper.

PhRMA and IMS want the laws struck down because they violate their First Amendment freedom of speech rights -- i.e. the right to buy information, sell it to drug companies, who can then make commercial arguments for their drugs.

The Vermont ruling noted the decision in Wyeth v. Levine, in a footnote:

In light of the Supreme Court's holding in Wyeth, the Court declines to find section 21(c) preempted when the requirements it imposes merely "duplicate" or "parallel" federal requirements.

While the footnote is not part of the holding and was not used to form the precedent in the case, the judge still noted that PhRMA's case was hurt, not helped by Wyeth.

Read the Vermont attorney general's statement on the ruling here.

Hat tips to PAL, and the Prescription Project.